The bulls were on the rampage on Dalal Street on Monday, with the BSE Sensex hitting a lifetime high to close above the 22,000-mark. The rally was driven by pre-election optimism of a stable government. It was also aided by heavy short-covering and strong FII flows.
The Sensex rallied 300 points, or 1.38 per cent, to end at 22,055, supported by the banking and oil and gas indices, which surged 3 per cent and 2.46 per cent, respectively.
The Nifty also hit a lifetime high and settled at 6,584, up 89 points or 1.4 per cent.
According to exchange data, FIIs’ net investment in the markets on Monday stood at ₹1,465.62 crore.
Strong foreign inflows boosted the rupee to an eight-month high, with the currency recording a 14 paise gain to close at at 60.78 to the dollar.
“The markets are factoring in a strong positive mandate in the outcome of the upcoming general elections. Moreover, domestically a key positive is that headline inflation has eased considerably during February,” said Lalit Thakkar, MD, Angel Broking.
According to Alex Mathews, Head-Research, Geojit BNP Paribas Financial Services, the Government’s disinvestment programme, which has garnered about $3.1 billion so far, would help reduce the fiscal deficit.
Broader markets quiet
The large-cap rally notwithstanding, broader markets were silent with the BSE Midcap and Small-cap indices closing 0.13 and 0.15 per cent higher, respectively.
“The market breadth was weak with thin volumes,” said Suresh Parmar, Associate Vice-President of Institutional Equity, KJMC Capital Market Services.
However, cautioning investors from getting carried away by the market highs, Parmar added: “Retail investors and small traders should wait for a strong correction as buying at current levels would be risky given the FII-driven rally.”